“If you don’t have a competitive advantage, don’t compete.” – Jack Welch
The quote from Jack Welch sums up accurately how important it is for a company to have a competitive advantage – without it there would be no point in trying to sustain the business. This statement comes from some who was at the helm of one of the most successful companies and hence his take on competitive advantage is certainly worth incorporating. A competitive advantage, simply put is that aspect which distinguishes your company and its business from all the others. It is what will encourage and entice customers to choose your company over your closest competitor. Without a competitive advantage, a company really is nothing since it would have no ‘magnetic’ by which to attract customers – nothing unique and distinct to offer customers.
A competitive advantage is that which enables customers to see actual value in being in business with your company. It can be a combination of many factors – stellar customer service, great quality products and services, best pricing, convenient and many locations and other such factors. A company must first know its greatest strengths and then use them to fashion their competitive advantage statement to be presented to the target audience. A competitive advantage will keep you ahead of your competitors and make them seem insignificant in comparison. Start by first understanding how your company can build and then sustain a competitive advantage and ensure that this advantage is flexible and adaptable to the changing business environment and the ever-evolving customer needs. What is your company doing to ensure that it builds and portrays a competitive advantage to the customers?
Check back with your customers as to what they believe to be the strengths and shortcomings of your company and how you can build on those strong points to create a competitive advantage for your business. Customers would be happy to provide their suggestions, especially if they believe that doing so will make it easier for them to do business with you and will benefit them in many ways. Getting customers to ‘partner’ with you in this manner is the start of creating and building a competitive advantage for any company.
How will you know whether your offerings present a competitive advantage? Look at what your competitors are doing – make an in-depth analysis of their offerings, their potencies and shortcomings – this will enable you to step up and better whatever they do such that customers choose you. This does not imply that your company blindly copies and furthers what your competition does – a competitive advantage is built by offering something that no one has or will be able to replicate easily or hastily.
In order to clearly define and spell out its competitive advantage, many companies enlist the help of professionals. These professional agencies conduct market researches, prepare comparative reports and put together databases that allow a company to see how they are viewed in the market and what they need to do in order to improve and forge ahead. The more market information a company has, the easier it would be for them to formulate strategies that would give them a competitive advantage and sustain it for long. These agencies would also be able to gather customer information for the companies – for both existing and potential customer bases. This will enable a company to know their customers well resulting in even more customization of messages, products and services. This in turn pleases customers who will then provide repeat business and many referrals. Without a thorough understanding of who your customer is, it would be hard to put together strategies and policies that would find favour with them.
Post a thorough analysis of the customer base, a company can further build a competitive advantage by creating superior and better quality products, ideally suited to their customers. When products are customized to match customer needs, they will sell more and a company would, over time, enhance its reputation and get high revenues and huge profits. Of course, just making a great product is not sustainable as a competitive advantage since they can be easily replicated. Great products must be backed by great service. Easy, swift and consistently great customer service is quintessential to creating and building a competitive advantage. Good customer service gains customers, but service is not without its costs. In order to cover those costs you need to ensure that customers see value in whatever your company does for them.
Irrespective of size and stature, no company can ignore the crucial aspect of cost reduction. By keeping its costs low, a company can pass on the savings to their customers by lowering the costs of products and services. This is in turn will attract more customers and encourage existing customers to provide repeat business, thereby building a competitive advantage for itself. By re-examining internal processes, strategies, packaging, upgrading technology, hiring superior talent, energy efficient equipment and other such aspects, a company can cut down its expenses significantly. As a company becomes more efficient in managing its costs, it would be able to reduce the amount of money customers spend in buying their products – low prices with great quality translates to happy customers and we all know the power of this ‘breed’ of customers – possibly the single most potent step towards building a competitive advantage.
Happy customers do not remain happy permanently! Sounds funny but it is true and disgruntled customers are extremely detrimental for a company. Companies must focus on building and sustaining cordial, robust and personal relationships with their customers. For a competitive advantage, a company must demonstrate its humane side and exhibit care and empathy for its customers. People do not always shop at places that are the cheapest – they return to places where they were treated well, smiled at, remembered and made to feel special. As a famous quote says: “People are not interested in how much you know until they know how much you care.” Caring for your customers strengthens relationships and builds a competitive advantage that competitors will find hard to equal. There are numerous customer stories of how they would travel extra or make added effort to visit a particular store or restaurant simply because the people at the company ‘really care’ about them. Not only do they visit these stores, such customers would most certainly tell their friends about them too.
While products and services do have an impact and help in building a competitive advantage, what lasts as sustainable, is relationships. Customers tend to trust companies that they like and who like them. By portraying your company as one that promotes the profit and achievement of goals for its customers, will be a strong step towards a competitive advantage. Companies that are successful and appear to be getting ‘everything easily’, have actually worked very hard to understand their customer’s needs, values and expectations. They have consciously incorporated all these aspects in to their business framework and constantly find new ways to appear fresh, current and in tune with whatever customers deem as important. Creating and sustaining a competitive advantage is about adapting and keeping abreast with the changing needs of the customers and providing them with the best solutions – effectively and swiftly, before anyone else can even comprehend their needs.
